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Gold/Mining/Energy : Royal Oak-RYO -- Ignore unavailable to you. Want to Upgrade?

To: maintenance who wrote (687)	3/10/1998 11:56:00 PM
From: Lorne Larson	Read Replies (2) \| Respond to of 1706

Breaking news! Royal Oak hit by work stoppage B.C. orders halt at Kemess project after payment dispute By PETER KENNEDY Vancouver Bureau The Financial Post Cash-strapped Royal Oak Mines Inc. was scrambling yesterday after the British Columbia government ordered it to stop work at the vital tailings area of its Kemess gold-copper project. The order followed a payment dispute between Royal Oak and Knight Piesold Ltd., the Vancouver engineering firm hired to provide management systems for the mine's waste disposal pond. After Knight Piesold withdrew its workers from the site, B.C.'s Energy & Mines Ministry was forced to intervene so environmental safety would not be compromised. News of the dispute is the latest blow for Royal Oak, which is trying to generate cash by getting the mine into production next month. Yesterday, the stock (RYO/TSE) rose 5› to close at $1.72, well below the 52-week high of $5. "About 30% of the activity at the site is being affected,'' said Don Zadravec, a spokesman for the B.C. ministry. Knight Piesold director Ken Brouwer said his company is in the midst of discussions with Royal Oak about paying its bills. "They are trying to get us our outstanding monies,'' said Brouwer, adding his staff won't return until the issue is resolved. A second company, Tercon Contractors Ltd. of Kamloops, B.C., has also withdrawn workers from the tailings site. "There were some financial problems and we are not involved in that project any more,'' said a Tercon official who asked to not be named. "There were also political problems, but I can't go into any details.'' While calls to Royal Oak's Kirkland, Wash., head office were not returned, there is growing speculation the company may seek more help from the B.C. government, which agreed to contribute up $166 million to the Kemess project. The funding was provided as part of a compensation package after a decision to halt development of the Windy Craggy copper mine in B.C. Lorne Grasley, a director of policy research at the B.C. Mining Association, said he doesn't know of any approaches from Royal Oak, "but it's something I'd keep my eye on.'' After hearing rumors of the Knight Piesold dispute, worried U.S. investors were phoning Royal Oak yesterday to find out what was going on at Kemess. Sources have told The Financial Post that after failing last week to secure a $30-million equity financing deal with Toronto-based First Marathon Securities Ltd., Royal Oak chief executive Margaret Witte is in talks with the company's U.S. debenture holders. Scott Levy, an analyst with Bankers Trust in New York, said as far as he knows, Royal Oak is still making interest payments on US$175 million of high-yield notes. However, he said his clients are still extremely concerned about the future viability of the company. "This is a very trying situation,'' he said. While another Canadian contractor said he is optimistic Royal Oak can get Kemess into production, the project "has been a terrific cash drain for them.'' "My understanding is that all they need to do is run a power line through to their mill and they will be able to start generating cash,'' said the contractor. Knight Piesold also remains confident it will get paid eventually. "I have been in contact with them and there is some hope something will be resolved fairly shortly,'' Brouwer said.